The West has responded in unison to the entry of Russian troops into the Donbas region, a move that has been deemed an 'illegal act' by the EU, the US, the UK and many other countries. So far, only Syria and Russia itself recognise the independence of the self-proclaimed republics of Donetsk and Luhansk. However, it is possible that other nations that maintain good relations with Moscow, such as Venezuela and Nicaragua - which already recognise Abkhazia and South Ossetia - will follow the same path as Damascus.
Washington was the first country to react with sanctions to Russian President Vladimir Putin's decree. US President Joe Biden signed an executive order banning all trade with the pro-Russian republics. This economic blockade is followed by another package of sanctions against two Russian financial institutions, the Russian military bank and the VEB, a Russian national institution that works for the social and economic development of the country. The VEB is also responsible for managing the state's public debt, pension funds and strengthening the technology sector.
Biden has also announced that sanctions will also be imposed on members of Russia's elite families, who, he said, "share in the corrupt profits of the Kremlin's policies and must share in the pain". Alexander Bortnikov, head of the Russian intelligence service (FSB), is on this list.
In Europe, the EU 27 have unanimously agreed to adopt new sanctions against Russia. Foreign ministers imposed restrictions on 27 individuals, including defence minister Sergei Shoigu, Putin's chief of staff Anton Vaino, Russian Today (RT) editor-in-chief Margarita Simonyan and foreign ministry spokeswoman Maria Zakharova. Sanctions have also been announced against institutions, banks and the 352 Duma deputies who voted for the recognition of Donetsk and Luhansk.
The assets of these politicians will be frozen and they will be denied access to the European Union. Russia's access to European markets is also suspended. "There will be no more shopping in Milan, parties in Saint Tropez or diamonds in Antwerp. This is the first step. We are united," wrote the head of European diplomacy, Josep Borrell, in a tweet that he later deleted.
In this context, a key decision affecting Russian gas supplies has also been taken on the continent. Germany, in response to the Kremlin's decision, opted to suspend the approval process for the Nord Stream 2 pipeline. Work on the 1,224-kilometre megaproject, which crosses the Baltic Sea from Russia to the German coast, was completed last September, meaning that in theory the pipeline would be ready for operation. However, Nord Stream 2 has been at the centre of controversy since its inception, even creating tensions between Washington and Berlin.
The US and other European countries such as Poland strongly oppose the project, considering it a 'political weapon' of Moscow. Moreover, if Nord Stream 2 were to be implemented, Russian gas would no longer pass through Ukrainian territory, and Kiev would lose millions of euros in transit fees. In addition to the pipeline that crosses Ukraine, Russian gas reaches the continent through Yamal-Europe, which passes through Belarus and Poland, and through Nord Stream 1, built in 2012 and the predecessor of the current controversial pipeline.
On the other hand, this is not the first obstacle that Germany has put in the way of the pipeline. In November, the agency that regulates the energy sector in the country suspended the certification procedure because the company in charge of managing the German section of the project did not comply with German legislation. Since then, and as tensions around Ukraine have increased, Nord Stream 2 has remained in disuse, although it has also played a key role in the crisis, as the $9.5 billion pipeline represents Europe's heavy dependence on Russian gas.
Russian giant Gazprom supplies Europe with more than 40 per cent of total natural gas. Germany, Austria, Bulgaria, Estonia, Latvia, Lithuania, Slovakia and Bulgaria are just some of the countries most dependent on Russian gas, according to Statista and Eurostat. For this reason, Nord Stream 2 would significantly benefit Europe in the midst of the current energy crisis, as up to 110 billion cubic metres of gas per year could be supplied through the pipeline.
It should also be noted that, although the project is owned by Gazprom, Nord Stream 2 is a Russian-European pipeline. Five continental companies have participated in its construction: OMV (Austria), Shell (UK-Netherlands), Engie (France) and Uniper and Wintershall (Germany). More European companies had considered participating, but, due to threats by former president Donald Trump, they abandoned the idea for fear of sanctions.
As reported by Nicolas Martin of the German DW, at least 18 European companies have stopped their activities in the project, including a subsidiary of Wintershall, which was involved from the beginning. DW also points out that the firms involved will only see a return on their investments when the gas flows through the pipeline, which is not likely to happen soon.
Amid fears that Russia will suspend gas supplies to Europe, Brussels is looking for options to replace this indispensable commodity. "Russia has always been a reliable supplier of natural gas to Germany, even at the height of the Cold War," says German Finance Minister Christian Lindner. However, he warns that this could change "if Russia were to invade Ukraine and the West were to pass tough sanctions against Moscow". "During the Cold War, despite all the events and political tensions, cooperation in the energy sector was not damaged. Things may be different now," he admitted in an interview with the Financial Times.
On the other hand, Lindner revealed that Berlin has put in place "contingency plans to provide alternative gas supplies" in case Russia decides to turn off the gas tap.
Many analysts argue that this will not happen, as Russia's economy depends on these exports and Moscow is seeking to remain a reliable exporter. However, other experts suggest that a gas suspension is possible, especially now that Russia and China have signed a 30-year contract to supply gas to the Asian giant through Power of Siberia 2, a pipeline that will complement the current one, Power of Siberia 1, in operation since the end of 2019.
Analysts at Oxford University's Institute for Energy Studies believe that Russia will suspend supplies in response to tough Western sanctions. They also consider the possibility that the ongoing conflict in the Donbas region could cause damage to one of the pipelines running through Ukraine.
For these reasons, Europe is beginning to look to other gas exporting countries. Norway has emerged as a possible alternative. The Nordic country announced in January that it expected a 9% increase in oil and gas production by 2024. Moreover, according to figures from the Petroleum Directorate gathered by EFE, last year Norway produced 102 million cubic metres of oil and 113 billion cubic metres of gas, which corresponds to almost 4 million barrels of oil equivalent per day.
However, the Norwegian company Equinor, the largest gas supplier in Europe after Gazprom, is already the main exporter in several European countries, such as France, the United Kingdom, Belgium and the Netherlands, making it difficult for it to replace the Russian giant in other Eastern European nations. In this respect, the Norwegian Prime Minister, Jonas Gahr Støre, assured CNN that his country "sends natural gas at maximum capacity and cannot replace Russian supplies".
The British financial firm Barclays agrees, stating that "it is not possible to compensate in the short term for the 150 to 190 billion cubic metres of gas that Russia sends annually to the European Union".
Even so, there are more possibilities, such as Azerbaijan, which has significant gas reserves. The Caucasian nation could send the hydrocarbon to Europe through two pipelines: the Trans-Adriatic and the Trans-Anatolian, which crosses Turkey. For this reason, NATO Secretary General Jens Stoltenbeg has already contacted Azeri President Ilham Aliyev. The Shah Deniz field in the southern Caspian Sea is one of the energy sources that could supply Europe. Azeri gas already reaches Turkey, Georgia and other neighbouring countries.
Another alternative is Japan. The Japanese government has offered to send liquefied natural gas (LNG) to Europe in the face of Russia's possible suspension of gas supplies. According to Japanese Trade Minister Koichi Hagiuda, several shipments of gas will arrive in Europe this month, although he did not specify how many ships or how much the continent will receive. Despite Tokyo's initiative, analysts continue to warn that it is insufficient.
Doha, which had presented itself as a reliable gas supplier to Europe, has been highly sceptical about possible alternatives to Russian gas. Speaking at a Gas Exporting Countries Forum (GECF) summit in Doha, Qatari Energy Minister and Qatar Petroleum CEO Saad al-Kaabi acknowledged that there was "no country that can replace" the volume offered by Russia, Reuters reported. "There is no capacity to do it from liquefied gas," he added at a conference where the issue took centre stage.
Alex Froley, LNG market analyst at Independent Commodity Intelligence Services, agrees, warning CNN that "global LNG production is virtually exhausted".
Al-Kaabi also recalled that "most LNG is tied to long-term contracts and very clear destinations. Therefore, replacing that amount of volume so quickly is almost impossible". Many nations, including Qatar, already have trade agreements with other countries that oblige them to produce gas at maximum capacity, so they cannot commit to do the same with others.
As the conflict in Ukraine escalates, energy prices are rising and with it the pressure on Europe, which urgently needs an alternative to Russia. Putin has insisted that the implementation of Nord Stream 2 would solve Europe's energy crisis, but given recent events in the Donbas, this is not an option for Brussels.